Question

Intro You took out a 15-year fixed-rate mortage to borrow $200,000 at an interest rate of 6% (APR) to buy a house.

Answer 1

We calculate the principal paid off after 110 months using CUMPRINC function in Excel :

rate = 6%/12 (converting annual rate into monthly rate)

nper = 15*12 (15 year loan with 12 monthly payments each year)

pv = 200000 (loan amount)

start period = 1 (We are calculating principal paid off between 1st and 110th month)

end period = 110 (We are calculating principal paid off between 1st and 110th month)

type = 0 (each payment is made at the end of month)

CUMPRINC is calculated to be $100,527.14

Al - X =CUMPRINC(6%/12,15*12,200000,1,110,0) B . C D E F G А (100,527.14) 1

The balance loan principal outstanding after 110 months =  $200,000 - $100,527.14 = $99,472.86